But when it comes to banks in this environment, I think we should not use book value as the most important measure of value. In an economy that'shumming along, I agree that book value is an excellent indicator of a bank's value as a company. With whatever is still lurking on their books, I would not trust book value.

Berkshire Hathaway (NYSE: BRK-B) closed at a 4% premium to book! You get buying the capital allocation skills of Uncle Warren and the talent all his operating CEOs for a song. Even assuming Buffett has passed and Berkshire were to distribute to shareholders the excess cash it generates, the operating CEOs have to be worth a decent premium over book.